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Fund managers and investors are tending to opt for fund extensions in the current market when evaluating fund terminations, according to the latest study by the European Association for Investors in Non-Listed Real Estate Vehicles.

Launched at EXPO REAL, the Fund Termination Study shows even more clearly than last year that continuation is now the most likely outcome when evaluating fund termination, Inrev said.

Nearly two-thirds of funds (59%) due to terminate in 2009-2011 decided to continue the fund - 88% by extension and 12% by rollover, rather than to terminate. This equates to EUR 15.8 bn in Gross Asset Value. Although investors are also seeking more liquidity in today’s market they have shown their support in the continuation of funds, the study shows. The current 'challenging' conditions in the European real estate market are the main reason why many investors and fund managers have decided that now is not the best time to sell assets, Inrev said.

The trend for continuation is simultaneously surprising and unsurprising, the Amsterdam-based organisation said. Fund managers and investors alike would currently prefer to continue in order to recoup their capital as the market recovers. However, this does not mean that all investors would prefer not to terminate now as some have their own liquidity issues or because of debt or other issues in the fund. Some investors are forced to stay invested in funds they would prefer to exit due to difficulties in liquidating at prices acceptable to the other investors, according to the study.